8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  February 1, 2008

 

SELECT COMFORT CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

0-25121	41-1597886
(Commission File No.)	(IRS Employer Identification No.)

9800 59th Avenue North, Minneapolis, Minnesota 55442

(Address of principal executive offices)             (Zip Code)

(763) 551-7000

(Registrant’s telephone number, including area code)

6105 Trenton Lane North, Minneapolis, Minnesota 55442

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01.  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On February 1, 2008, Select Comfort Corporation entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”), amending our Credit Agreement dated as of June 9, 2006 (the “Credit Agreement”).  The parties to Amendment No. 2 are Select Comfort Corporation, Select Comfort Retail Corporation, JPMorgan Chase Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent and JPMorgan Chase Bank, National Association, Bank of America, N.A., Citicorp USA, Inc., Wells Fargo Bank, National Association and Branch Banking and Trust Co., as Lenders.

Amendment No. 2 waives the requirement that Select Comfort Corporation comply with the minimum interest coverage ratio financial covenant for the fiscal quarter ending on December 29, 2007.  Additionally, Amendment No. 2 revises the permissible minimum interest coverage ratio from the previous ratio of “2.75 to 1.00” to a reduced ratio based on a schedule that starts at “1.75 to 1.00” for the fiscal quarter ending on or about March 31, 2008 and increases until it reaches “2.75 to 1.00” for the fiscal quarter ending on or about March 31, 2011 and each fiscal quarter ending thereafter.  Finally, Amendment No. 2 expands the definition of “EBITDA” under the Credit Agreement.

The aforementioned description of Amendment No. 2 is qualified in its entirety by reference to the complete terms of Amendment No. 2, a copy of which is included as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

For informational purposes only, on June 28, 2007 Select Comfort Corporation entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”).  Amendment No. 1 made minor revisions to the Credit Agreement including (i) amending the definition of “Interest Period” to permit an interest period of one week in addition to the other interest periods allowed under the Credit Agreement, (ii) allowing Select Comfort Corporation and the other permitted borrowers, to borrow at lower amounts for revolving loans and in lower multiples for swingline loans, (iii) increasing the aggregate amount of letters of credit that Select Comfort Corporation and the other permitted borrowers may obtain under the Credit Agreement, and (iv) authorizing Select Comfort Corporation to make restricted payments in more situations.

The aforementioned description of Amendment No. 1 is qualified in its entirety by reference to the complete terms of Amendment No. 1, a copy of which is included as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

On February 1, 2008, Select Comfort Corporation entered into a Second Amendment to the Amended and Restated Private Label Consumer Credit Card Program Agreement (the “Second Amendment”), amending the Amended and Restated Private Label Consumer Credit Card Program Agreement dated as of December 14, 2005, as previously amended by the First Amendment thereto effective as of April 23, 2007 (the “GE Agreement”).  The parties to the Second Amendment are Select Comfort Corporation, Select Comfort Retail Corporation and GE Money Bank.

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The Second Amendment waives the requirement that Select Comfort Corporation comply with the minimum interest coverage ratio financial covenant under the GE Agreement for the fiscal quarter ending on December 29, 2007.  Additionally, the Second Amendment revises the minimum interest coverage ratio under the GE Agreement to conform to the terms set forth in the Credit Agreement described above.

The aforementioned description of the Second Amendment is qualified in its entirety by reference to the complete terms of the Second Amendment, a copy of which is included as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

10.1                             Amendment No. 1 to Credit Agreement, dated as of June 28, 2007.

10.2                             Amendment No. 2 to Credit Agreement, dated as of February 1, 2008.

                      10.3       Second Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement,

                                                           dated as of February 1, 2008.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SELECT COMFORT CORPORATION
	(Registrant)
Dated:  February 7, 2008	By:
	Title:    Senior Vice President

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EXHIBIT INDEX

Exhibit No.                    Description                                                                                                

10.1                                Amendment No. 1 to Credit Agreement, dated as of June 28, 2007.

10.2                                Amendment No. 2 to Credit Agreement, dated as of February 1, 2008.

10.3                                Second Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement,

                                       dated as of February 1, 2008.

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EX-10.1

Execution Copy

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This Amendment (this “First Amendment”) is entered into as of June 28, 2007 by and among Select Comfort Corporation, a Minnesota corporation (the “Company”), the Subsidiary Borrowers party hereto, JPMorgan Chase Bank, National Association, as Administrative Agent, the other financial institutions signatory hereto (the "Lenders") and Bank of America, N.A., as Syndication Agent.

RECITALS

A.           The Company, the Subsidiary Borrowers, the Administrative Agent and the Lenders are party to that certain Credit Agreement dated as of June 9, 2006 (the “Credit Agreement”).  Unless otherwise specified herein, capitalized terms used in this First Amendment shall have the meanings ascribed to them by the Credit Agreement.

B.           The Company and the Subsidiary Borrowers (collectively, the "Borrowers") have requested that the Administrative Agent and the Lenders amend the Credit Agreement to reflect certain changes thereto.

C.           The Administrative Agent and the undersigned Lenders are willing to amend the Credit Agreement on the terms and conditions set forth below.

Now, therefore, in consideration of the mutual execution hereof and other good and valuable consideration, the parties hereto agree as follows:

1.           Amendments to Credit Agreement.  Upon the First Amendment Effective Date (as defined below), the Credit Agreement is hereby amended as follows:

(a)           Section 1.01 of the Credit Agreement is hereby amended by adding the following new definitions thereto in alphabetical order:

"First Amendment" means that certain Amendment No. 1 to Credit Agreement dated as of June 28, 2007 among the Company, the Subsidiary Borrowers, the Administrative Agent and the Lenders signatory thereto.

"First Amendment Effective Date" has the meaning set forth in Section 4 of the First Amendment.

(b)           Section 1.01 of the Credit Agreement is hereby amended by restating the definition of Interest Period as follows:

“Interest Period” means with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending (x) one week thereafter or (y) on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Company may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period described in subclause (y) above that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

(c)           Section 2.02(c) of the Credit Agreement is hereby amended by (i) deleting the reference to "$5,000,000" appearing in the first sentence therein and replacing it with "$1,000,000" and (ii) restating the third sentence thereof as follows:

"Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $100,000."

(d)           Section 2.05(b) of the Credit Agreement is hereby amended by deleting the reference to "$25,000,000" appearing in the final sentence therein and replacing it with "$35,000,000".

(e)           Section 6.06(d) of the Credit Agreement is hereby amended by restating such clause as follows:

"(d) the Company may make other Restricted Payments so long as (A) if the Leverage Ratio (calculated on a pro forma basis after giving effect to such other Restricted Payment and any Indebtedness incurred in connection therewith) in accordance with the most recently delivered Financials is greater than or equal to 2.50 to 1.00, (y) the aggregate of all such other Restricted Payments made after the First Amendment Effective Date (excluding (i) any portion of a proposed payment which on a pro forma basis (including all Indebtedness proposed to be incurred) does not cause such Leverage Ratio to exceed 2.50 to 1.00 and (ii) those payments made pursuant to clause (B) below) does not exceed the sum of $150,000,000 plus 50% of the aggregate of all positive Net Income of the Company for each fiscal quarter completed after the First Amendment Effective Date and (z) no Default has occurred and is continuing or would occur after giving effect thereto, and (B) if the Leverage Ratio (calculated on a pro forma basis after giving effect to such other Restricted Payment and any Indebtedness incurred in connection therewith) in accordance with the most recently delivered Financials is less than 2.50 to 1.00, no Default has occurred and is continuing or would occur after giving effect thereto."

2.           Representations and Warranties of the Borrowers.  The Borrowers represent and warrant that:

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(a)           The execution, delivery and performance by the Borrowers of this First Amendment have been duly authorized by all necessary corporate action and this First Amendment is a legal, valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with its terms, except as the enforcement thereof may be subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law;

(b)           Each of the representations and warranties contained in the Credit Agreement is true and correct in all material respects on and as of the date hereof as if made on the date hereof (except any such representation or warranty that expressly relates to or is made expressly as of a specific earlier date, in which case such representation or warranty shall be true and correct with respect to or as of such specific earlier date); and

(c)           After giving effect to this First Amendment, no Default has occurred and is continuing.

4.           Effective Date.  This First Amendment shall become effective upon satisfaction of the following conditions (the date of such satisfaction being the "First Amendment Effective Date"):

(a)           Executed Amendment.  Receipt by the Administrative Agent of duly executed counterparts of this First Amendment from the Company, the Subsidiary Borrowers and the Required Lenders executing the same.

(b)           Amendment Fees.  The Company shall have paid to the Administrative Agent (i) an amendment fee in an amount equal to $3,000 for each Lender executing this First Amendment on the First Amendment Effective Date and (ii) the fee in the amount set forth in the fee letter dated as of the First Amendment Effective Date by and between Company and Administrative Agent.

(c)           Reaffirmation of Guaranty.  The Reaffirmation of Guaranty dated as of the date hereof in the form attached hereto as Exhibit A executed by each of the Subsidiary Guarantors.

5.           Reference to and Effect Upon the Credit Agreement.

(a)           Except as specifically amended above, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

(b)           The execution, delivery and effectiveness of this First Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under the Credit Agreement or any Credit Document, nor constitute a waiver of any provision of the Credit Agreement or any Credit Document, except as specifically set forth herein.  Upon the effectiveness of this First Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

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6.           Costs and Expenses.  The Borrowers hereby affirm their obligations under Section 9.03 of the Credit Agreement to reimburse the Administrative Agent for all reasonable costs and out-of-pocket expenses paid or incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this First Amendment, including but not limited to the reasonable fees, charges and disbursements of attorneys for the Administrative Agent with respect thereto.

7.           Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York (without regard to conflict of law provisions thereof).

8.           Headings.  Section headings in this First Amendment are included herein for convenience of reference only and shall not constitute a part of this First Amendment for any other purposes.

9.           Counterparts.  This First Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date and year first above written.

   SELECT COMFORT CORPORATION, as a Borrower

   By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

   SELECT COMFORT RETAIL CORPORATION, as a Borrower

   By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

   SELECT COMFORT DIRECT CORPORATION, as a Borrower

   By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

   SELECT COMFORT SC CORPORATION, as a Borrower

   By  /s/ James Stoffel

   Name:  James Stoffel

   Title:  VP - Treasurer

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   JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
                                    individually and as Administrative Agent

   By  /s/ James M. Sumoski                                                                          

   Name:  James M. Sumoski

   Title:  Vice President

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   BANK OF AMERICA, N.A., individually and as Syndication Agent

   By  /s/ Steven K. Kessler                                                                           

   Name:  Steven K. Kessler

   Title:  Senior Vice President

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   CITICORP USA, INC., as a Lender

   By  /s/ C. Murphy                                                                            

   Name:  Christopher Murphy

   Title:  Managing Director

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   WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

        By  /s/  Sharlyn Rekenthaler                                                                          

   Name:  Sharlyn Rekenthaler

   Title:  Vice President

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   BRANCH BANKING AND TRUST CO., as a Lender

           By  /s/ Troy R. Weaver                                                                          

   Name:  Troy R. Weaver

   Title:  Senior Vice President

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EXHIBIT A

REAFFIRMATION OF GUARANTY

Each of the undersigned hereby acknowledges receipt of a copy of Amendment No. 1 to the Credit Agreement (the “First Amendment”) dated as of June 28, 2007, and reaffirms its obligations under the Subsidiary Guaranty dated as of June 9, 2006 in favor of JPMorgan Chase Bank, National Association, as Administrative Agent, and the Lenders (as defined in the First Amendment).

Dated as of June 28, 2007

   SELECT COMFORT RETAIL CORPORATION

   By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

   SELECT COMFORT DIRECT CORPORATION

   By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

   SELECT COMFORT SC CORPORATION

           By  /s/ James Stoffel                                                                           

   Name:  James Stoffel

   Title:  VP - Treasurer

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EX-10.2

Execution Copy

AMENDMENT NO. 2 TO CREDIT AGREEMENT

This Amendment (this “Second Amendment”) is entered into as of February 1, 2008 by and among Select Comfort Corporation, a Minnesota corporation (the “Company”), the Subsidiary Borrowers party hereto, JPMorgan Chase Bank, National Association, as Administrative Agent, the other financial institutions signatory hereto (the "Lenders") and Bank of America, N.A., as Syndication Agent.

RECITALS

A.           The Company, the Subsidiary Borrowers, the Administrative Agent and the Lenders are party to that certain Credit Agreement dated as of June 9, 2006, as amended pursuant to Amendment No. 1 to Credit Agreement dated as of June 28, 2007 (the “Credit Agreement”).  Unless otherwise specified herein, capitalized terms used in this Second Amendment shall have the meanings ascribed to them by the Credit Agreement.

B.           The Company and the Subsidiary Borrowers (collectively, the "Borrowers") have requested that the Administrative Agent and the Lenders amend the Credit Agreement to reflect certain changes thereto and grant a limited waiver with respect to the Credit Agreement.

C.           The Administrative Agent and the undersigned Lenders are willing to amend the Credit Agreement and to grant a limited waiver on the terms and conditions set forth below.

Now, therefore, in consideration of the mutual execution hereof and other good and valuable consideration, the parties hereto agree as follows:

1.           Amendments to Credit Agreement.  Upon the Second Amendment Effective Date (as defined below), the Credit Agreement is hereby amended as follows:

(a)           The definition of "EBITDA" set forth in Section 1.01 of the Credit Agreement is hereby amended by (i) deleting the "and" appearing before clause (c) thereof and inserting a "," prior to clause (c) and (ii) inserting new clauses (d) and (e) as follows:

",(d) non-cash impairment expenses relating to store closures and/or remodelings during such period, and (e) non-cash charges or gains which are unusual, non-recurring or extraordinary during such period."

(b)           Section 6.09 of the Credit Agreement is hereby amended by restating such section as follows:

“SECTION 6.09 Minimum Interest Coverage Ratio.  The Company will not permit the Interest Coverage Ratio as of the end of any fiscal quarter of the Company to be less than the applicable ratio set forth below:

Fiscal Quarter Ending On or About	Interest Coverage Ratio
March 31, 2008	1.75 to 1.00
June 30, 2008	1.75 to 1.00
September 30, 2008	1.75 to 1.00
December 31, 2008	1.75 to 1.00
March 31, 2009	1.75 to 1.00
June 30, 2009	1.75 to 1.00
September 30, 2009	2.00 to 1.00
December 31, 2009	2.00 to 1.00
March 31, 2010	2.25 to 1.00
June 30, 2010	2.25 to 1.00
September 30, 2010	2.50 to 1.00
December 31, 2010	2.50 to 1.00
March 31, 2011 and each fiscal quarter ending thereafter	2.75 to 1.00"

(c)           Schedule 1.01 of the Credit Agreement is hereby amended and restated as set forth on Annex I hereto.

2.           Limited Waiver.  Subject to the terms and conditions herein, the Administrative Agent and the Lenders signatory hereto hereby waive the requirement that the Company comply with the financial covenant set forth in Section 6.09 of the Credit Agreement for the fiscal quarter ending on December 29, 2007.

3.           Representations and Warranties of the Borrowers.  The Borrowers represent and warrant that:

(a)           The execution, delivery and performance by the Borrowers of this Second Amendment have been duly authorized by all necessary corporate action and this Second Amendment is a legal, valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with its terms, except as the enforcement thereof may be subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law;

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(b)           Each of the representations and warranties contained in the Credit Agreement is true and correct in all material respects on and as of the date hereof as if made on the date hereof (except any such representation or warranty that expressly relates to or is made expressly as of a specific earlier date, in which case such representation or warranty shall be true and correct with respect to or as of such specific earlier date); and

(c)           After giving effect to this Second Amendment, no Default has occurred and is continuing.

4.           Effective Date.  This Second Amendment shall become effective upon satisfaction of the following conditions (the date of such satisfaction being the "Second Amendment Effective Date"):

(a)           Executed Amendment.  Receipt by the Administrative Agent of duly executed counterparts of this Second Amendment from the Company, the Subsidiary Borrowers and the Required Lenders executing the same.

(b)           Amendment Fees.  The Company shall have paid to the Administrative Agent the fees in the amounts set forth in the fee letter dated as of the Second Amendment Effective Date by and between Company and Administrative Agent.

(c)           Reaffirmation of Guaranty.  The Reaffirmation of Guaranty dated as of the date hereof in the form attached hereto as Exhibit A executed by each of the Subsidiary Guarantors.

5.           Reference to and Effect Upon the Credit Agreement.

(a)           Except as specifically amended above, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

(b)           The execution, delivery and effectiveness of this Second Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under the Credit Agreement or any Credit Document, nor constitute a waiver of any provision of the Credit Agreement or any Credit Document, except as specifically set forth herein.  Upon the effectiveness of this Second Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

6.           Costs and Expenses.  The Borrowers hereby affirm their obligations under Section 9.03 of the Credit Agreement to reimburse the Administrative Agent for all reasonable costs and out-of-pocket expenses paid or incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Second Amendment, including but not limited to the reasonable fees, charges and disbursements of attorneys for the Administrative Agent with respect thereto.

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7.           Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York (without regard to conflict of law provisions thereof).

8.           Headings.  Section headings in this Second Amendment are included herein for convenience of reference only and shall not constitute a part of this Second Amendment for any other purposes.

9.           Counterparts.  This Second Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date and year first above written.

  SELECT COMFORT CORPORATION, as a Borrower

  By  /s/ James Stoffel                                                                           

  Name:  James Stoffel

  Title:  VP - Finance - International & Treasurer

  SELECT COMFORT RETAIL CORPORATION, as a Borrower

  By  /s/ James Stoffel                                                                           

  Name:  James Stoffel

  Title:  VP - Finance - International & Treasurer

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  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
                       individually and as Administrative Agent

  By  /s/ James M. Sumoski                                                                           

  Name:  James M. Sumoski

  Title:  Vice President

  BANK OF AMERICA, N.A., individually and as Syndication Agent

  By  /s/ Steven K. Kessler                                                                           

  Name:  Steven K. Kessler

  Title:  Senior Vice President

  CITICORP USA, INC., as a Lender

  By  /s/ Joshua D. Weiner  

  Name:  Joshua D. Weiner

  Title:  Vice President

  WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

          By  /s/ Sharlyn Rekenthaler  

  Name:  Sharlyn Rekenthaler

  Title:  Vice President

  BRANCH BANKING AND TRUST CO., as a Lender

          By  /s/ Troy R. Weaver  

  Name:  Troy R. Weaver

  Title:  Senior Vice President

ANNEX I

Schedule 1.01

PRICING SCHEDULE

Applicable Rate	Level I Status	Level II Status	Level III Status
Eurocurrency Spread	0.60%	0.70%	0.80%
Facility Fee Rate	0.15%	0.175%	0.20%

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

“Financials” means the annual or quarterly financial statements of the Company delivered pursuant to Section 5.01 of this Agreement.

“Level I Status” exists at any date if, as of the last day of the fiscal quarter of the Company referred to in the most recent Financials, the Leverage Ratio is less than 2.00 to 1.00.

“Level II Status” exists at any date if, as of the last day of the fiscal quarter of the Company referred to in the most recent Financials, (i) the Company has not qualified for Level I Status and (ii) the Leverage Ratio is less than 2.50 to 1.00.

“Level III Status” exists at any date if the Company has not qualified for Level I Status or Level II Status.

“Status” means Level I Status, Level II Status, or Level III Status.

The Applicable Rate shall be determined in accordance with the foregoing table based on the Company’s Status as reflected in the then most recent Financials.  Adjustments, if any, to the Applicable Rate shall be effective five Business Days after the Administrative Agent has received the applicable Financials.  If the Company fails to deliver the Financials to the Administrative Agent at the time required pursuant to the Credit Agreement, then the Applicable Rate shall be the highest Applicable Rate set forth in the foregoing table until five days after such Financials are so delivered.

EXHIBIT A

REAFFIRMATION OF GUARANTY

Each of the undersigned hereby acknowledges receipt of a copy of Amendment No. 2 to the Credit Agreement (the “Second Amendment”) dated as of February 1, 2008, and reaffirms its obligations under the Subsidiary Guaranty dated as of June 9, 2006 in favor of JPMorgan Chase Bank, National Association, as Administrative Agent, and the Lenders (as defined in the Second Amendment).

Dated as of February 1, 2008

  SELECT COMFORT RETAIL CORPORATION

  By  /s/ James Stoffel                                                                           

  Name:  James Stoffel

  Title:  VP - Finance - International & Treasurer

EX-10.3

SECOND AMENDMENT TO AMENDED AND RESTATED

PRIVATE LABEL CONSUMER CREDIT CARD PROGRAM AGREEMENT

This SECOND AMENDMENT TO AMENDED AND RESTATED PRIVATE LABEL CONSUMER CREDIT CARD PROGRAM AGREEMENT (this “Amendment”), which shall be effective as of the 1st day of February, 2008, is entered into by and between GE Money Bank (“Bank”), Select Comfort Corporation (“Select Comfort”), and Select Comfort Retail Corporation (“SCRC”, and collectively with Select Comfort, “Retailer”), and amends that certain Amended and Restated Private Label Consumer Credit Card Program Agreement dated as of December 14, 2005 by and between Bank and Retailer (as amended by that certain First Amendment To Amended And Restated Private Label Consumer Credit Card Program Agreement, dated as of April 23, 2007, the “Agreement”).  Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Agreement.

RECITALS

WHEREAS, the parties wish to amend the certain provisions of the financial covenants set forth in the Agreement, as further described herein.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

I.           AMENDMENT

(a)           Amendment to Schedule 6.7.  Schedule 6.7 of the Agreement is hereby deleted in its entirety and replaced with the revised Schedule 6.7 attached hereto as Exhibit A.

II.           LIMITED WAIVER

(a)           Limited Waiver.  Subject to the terms and conditions herein, Bank hereby waives the requirement that Retailer comply, for the fiscal quarter of Retailer ending on December 29, 2007, with the “Minimum Interest Coverage Ratio” financial covenant as set forth in Schedule 6.7 of the Agreement prior to the date of this Amendment.

III.           MISCELLANEOUS

(a)           Authority for Amendment; Effective Date.  The execution, delivery and performance of this Amendment have been duly authorized by all requisite corporate action on the part of Retailer and Bank and upon execution by all parties, will constitute a legal, binding obligation thereof.

(b)           Effect of Amendment. Except as specifically amended hereby, the Agreement, and all terms contained therein, remains in full force and effect.  The Agreement, as amended by this Amendment, constitutes the entire understanding of the parties with respect to the subject matter hereof.

(c)           Binding Effect; Severability.  Each reference herein to a party hereto shall be deemed to include its successors and assigns, all of whom shall be bound by this Amendment and in whose favor the provisions of this Amendment shall inure.  In case any one or more of the provisions contained in this Amendment shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

(d)           Further Assurances.  The parties hereto agree to execute such other documents and instruments and to do such other and further things as may be necessary or desirable for the execution and implementation of this Amendment and the consummation of the transactions contemplated hereby.

(e)           Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Utah.

(f)           Counterparts.  This Amendment may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one agreement.

[signatures on following page]

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IN WITNESS WHEREOF, Retailer and Bank have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

SELECT COMFORT CORPORATION By:  /s/ James L. Stoffel                                                                       Name:  James L. Stoffel      Title:  VP - Treasurer	GE MONEY BANK By:  /s/ William Ellingwood                                                                        Name:  William Ellingwood      Title:  SVP
SELECT COMFORT RETAIL CORPORATION By:  /s/ James L. Stoffel                                                                       Name:  James L. Stoffel      Title:  VP - Treasurer

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EXHIBIT 1

TO SECOND AMENDMENT

SCHEDULE 6.7

To

Credit Card Program Agreement

Financial Covenants

(1)  MAXIMUM LEVERAGE RATIO. Retailer shall not, as of the end of any fiscal quarter of Retailer, allow the Leverage Ratio (as defined below) to be equal to or greater than 3.0:1.

(2)  MINIMUM INTEREST COVERAGE RATIO. Retailer shall not, as of the end of any fiscal quarter of Retailer as set forth below, allow the Interest Coverage Ratio (as defined below) to be less than the applicable ratio set forth below:

Fiscal Quarter Ending On or About	Interest Coverage Ratio
March 31, 2008	1.75 to 1.00
June 30, 2008	1.75 to 1.00
September 30, 2008	1.75 to 1.00
December 31, 2008	1.75 to 1.00
March 31, 2009	1.75 to 1.00
June 30, 2009	1.75 to 1.00
September 30, 2009	2.00 to 1.00
December 31, 2009	2.00 to 1.00
March 31, 2010	2.25 to 1.00
June 30, 2010	2.25 to 1.00
September 30, 2010	2.50 to 1.00
December 31, 2010	2.50 to 1.00
March 31, 2011 and each fiscal quarter ending thereafter	2.75 to 1.00"

(3)  DEFINED TERMS.  The definitions of Leverage Ratio and Interest Coverage Ratio set forth below are taken from that certain Credit Agreement, dated as of June 9, 2006 by and among JP Morgan Chase Bank, National Association (as administrative agent), Bank of America, N.A. (as syndication agent) and the other lenders from time to time party thereto, on the one hand, and Select Comfort Corporation and those of its subsidiaries listed as borrowers thereunder, on the other (as amended by that certain Amendment No. 1 to Credit Agreement, dated as of June 28, 2007, and by that certain Amendment No. 2 to Credit Agreement, dated as of February 1, 2008 (the “Effective Date”), the “Credit Agreement”).  Capitalized terms used in the following definitions, as well as all additional imbedded defined terms contained in such capitalized terms (and any further imbedded defined terms), shall be given the meanings set forth in the Credit Agreement as of the Effective Date, without giving effect to any subsequent amendments, deletions, alterations or waivers of any such terms.

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“Interest Coverage Ratio” means, as of the end of any fiscal quarter of Retailer, the ratio of (a) EBITDAR to (b) the sum of Total Interest Expense plus Rentals, in each case, for the period of four fiscal quarters then ended, computed on a consolidated basis for Retailer and its subsidiaries.

“Leverage Ratio” means, at any time, the ratio of Total Debt at such time to EBITDA for the most recently completed four fiscal quarters of Retailer, computed on a consolidated basis for Retailer and its subsidiaries.

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